Yet another COBRA question ...
newbee
3 Posts
We have what may be a very serious situation on our hands and need sage advice from the forum participants, please!
We just learned that out of about three dozen COBRA participants with our company, a handful were never notified by our third-party plan administrator that our insurance was changing July 1. We met all our deadlines for getting the particulars to the admininstrator, including contact information for all the participants, and it appears they just dropped the ball completely.
The non-notified participants are panicking; *they* alerted us to the problem, and now they can't find out if they're still insured. Plus, their 63-day HIPAA eligibility grace period is about to expire if they *aren't* still insured. If it turns out they are (and I think they are, because they can't be terminated if they haven't been billed, can they?), they're facing the prospect of paying several months' premiums immediately.
What can we tell these employees when they call? How can we resolve this problem? One participant suggested that the administrator be forced to pay the back premiums for each person they "forgot." (I'm leaning toward that!)
And can the Department of Labor come after us? x:o
Thank you all so much for reading.
We just learned that out of about three dozen COBRA participants with our company, a handful were never notified by our third-party plan administrator that our insurance was changing July 1. We met all our deadlines for getting the particulars to the admininstrator, including contact information for all the participants, and it appears they just dropped the ball completely.
The non-notified participants are panicking; *they* alerted us to the problem, and now they can't find out if they're still insured. Plus, their 63-day HIPAA eligibility grace period is about to expire if they *aren't* still insured. If it turns out they are (and I think they are, because they can't be terminated if they haven't been billed, can they?), they're facing the prospect of paying several months' premiums immediately.
What can we tell these employees when they call? How can we resolve this problem? One participant suggested that the administrator be forced to pay the back premiums for each person they "forgot." (I'm leaning toward that!)
And can the Department of Labor come after us? x:o
Thank you all so much for reading.
Comments
Maybe I'm missing something regarding the COBRA regs. and if so, I apologize.
1) How long did they let this go before you were told they did not receive notices? Did you find out from the COBRA recepients?
2) It could be that a few folks just didn't have the $ to pay the premium at the time and tried to stretch it, but then maybe not.
3) Make sure the COBRA notices get to these folks ASAP, send them certified!
4) They are still within the 60 days limitation, so get the notice out right now.
5) Contact your TPA and instruct them to accept all payments as 'on time' through, say, September 5 (giving your COBRA people time to get the two months premium together).
6) Yes, these folks knew they had premiums coming to pay,so paying two months shouldn't surprise them.
Depending on how soon they now get their notices, they should be able to get their payment in within the next two weeks. And if you have a TPA, you have some authority as to whether or not you will accept a late payment, and in this instance - you will. But, set a deadline and be firm.
I would also send a letter to the Mgr of your TPA, informing him/her of this problem, and what you expect to be done to remedy the problem.
Were these folks already on COBRA? If so, then when the insurance changed, they should have received their checks back with a letter from the previous carrier. This in turn should have triggered them to call you or a HR rep.
Why did they wait so long before asking questions?
If you have a TPA, you have some authority over them, and can instruct them to accept a late payment (for July/August) up to, say, Sept. 5. Send a letter(certified)out to your COBRA recipients instructing them where to send their payment and be clear that they need to bring themselves current, and that benefits will not be paid for months not made current. Instruct them that premiums must be made on time or coverage will be canceled, and be firm on your deadline.
Having said all that, I feel I should point out that you know that your TPA made a mistake and dropped the ball here. Someone from the TPA should talk to the carrier and "schmooze" them into agreeing that this is a clerical error and all your COBRA participants should be able to continue their insurance. If the carrier doesn't agree, then you need to ask yourself why you are doing business with them. I would also see many lawsuits and counter-lawsuits in your future.
Get the TPA to throw themselves on the mercy of the carrier and get those partipants insurance. That is the best way to avoid a lawsuit. But make the participants pay for their own insurance. After all, they are not doing you a favor by giving you the business so have no reason to expect extra perks because of a mistake. All they should expect is for you to make the outcome the same as if they always had insurance.
Good luck!
So, to explain:
>Were these folks already on COBRA? If so, then when the insurance
>changed, they should have received their checks back with a letter
>from the previous carrier. This in turn should have triggered them to
>call you or a HR rep.
>
>Why did they wait so long before asking questions?
>
They were indeed already on COBRA and had been paying their premiums directly to the insurance provider. (The provider was serving as COBRA administrator.) When we changed TPAs, the ee's were supposed to be timely notified. We now know that these were not. In fact, they'd all received premium notices from the former administrator for the month of July and had already paid their premiums in advance for that month. The former administrator then sent them letters mid-month informing them that they no longer had coverage after July 30 because a new TPA had been chosen. And BOY did the phones start ringing here! (The former administrator said it would refund the premiums within 45 days. That hasn't happened yet. xx( ) We told the ee's to call the new TPA to find out what was going on.
The TPA told these ee's that all their information had been mailed earlier. The ee's kept watching their mailboxes and calling and trying to find out what was happening, and they kept being told that the information "had been sent," "was about to be sent," "was going to be sent in a couple of days," ad nauseum. Because they were talking directly to the TPA and not to us, we didn't know until last week that the problem hadn't been resolved. That's when three of the ee's informed us and the TPA that they were about to call the DOL. And that's when these folks *finally* started getting their plan information and finding out that they had to choose different plans, etc.
All but a couple of the affected ee's have been tracking this since they got their first termination letter in mid-July. And I think their suggestion about making the TPA (and ultimately, us) pay the late premiums is more punitive than legally justified, but I understand where it's coming from.
>In truth, the law does not actually require you
> to 'bill' participants for their COBRA premium.
You're right, but it does require us to tell them (or make sure our TPA tells them) where they're supposed to *send* their COBRA premiums. And that's what appears to have happened here. They sent their premiums to the old administrator and were not timely notified that they need to send them to the new one, or even that there *was* one. xx(
>All they should expect is for you to make
> the outcome the same as if they always had insurance.
Yes. That's what we intend to do.
Again, thank you all for your advice!
My $0.02 worth,
DJ The Balloonman